Monday, December 5, 2016

After
William Burke (1792-1829), who killed people to sell their bodies for
dissection. His preferred method was smothering so as to leave the body unmarked
and suitable for dissection. He was captured, hanged, and on the judge's orders,
his body was publicly dissected.

_____________________________________________TIP OF THE WEEK

A burking
enervation of the guidance on affiliation and
franchises is in the new Standard Operating Procedures, effective January
1st, 2017. The intractable trichotillomania over eligibility should
grow quiescent.

SBA
will no longer review franchise and license agreements to determine
affiliation. Instead SBA will require the SBA Addendum to the Franchise
Agreement. Every loan applicant who is subject to a franchise or license
agreement will have to have this document executed. No more franchise
registry. No more franchise findings list.

Additional
guidance on credit elsewhere and fee relief for Veterans are in the
SOP

SBA
expects that the SOP should be arrant and not
frustraneous.

In
other words, there is no reason to be pervicacious and oppugned to SBA
loans.

_____________________________________Indices:

PRIME
RATE= 3.50%

SBA
LIBOR Base Rate December 2016 =3.63%

SBA
Fixed Base Rate December 2016 = 5.71%

________________________________________

SBA
504 Loan Debenture Rate for November

The
debenture rate is only 2.57% but note rate is 2.6147% and the effective yield is
4.357%.

________________________________________________AHEAD
OF THE YIELD CURVE

The latest report
on jobs burked any splentic presentiment over a bigly recrudescence of
interest rates.

According to the
Bureau of Labor Statistics, total nonfarm payroll increased by 178,000 in
November. This follows a 142,000 increase in October. In November, the
year-over-year change was 2.25 million jobs. Keep in mind over 2.25 million jobs were
lost in just four months in early 2009.

Here is a summary
of net payroll employment and this week’s interesting little table of
data:

October 142,000

September 208,000

August 167,000

July 252,000

June 292,000

May 11,000

April
123,000

March
186,000

February
244,000

January
172,000

2015
2,740,000

2014
3,116,000

2013
2,074,000

2012
2,193,000

2011
2,103,000

2010
1,022,000

2009
-5,052,000

2008
-3,617,000

2007
1,115,000

2006
2,071,000

2005
2,484,000

2004
2,019,000

What does all this
mean?

I don’t
know.

While jobs
continue to grow, there is some weakness.

The change in jobs
for October, the last report before the Presidential election, was revised down
from 161,000 to 142,000.

Despite the strong
headline number, a lackluster reading on average hourly earnings, which slumped
0.1% in November, helped weigh on Treasury yields by dampening inflation
expectations. The 30 year Treasury bond, which is most sensitive to
inflationary expectations, gained in price as its yield dropped 5.2 basis points
to 3.057%. The Federal Reserve meets next week. Just before their meeting,
there will be an auction of 30 year Treasury bonds. At the last auction in
November demand was weak and the yield of 2.902% was a hefty 43.2 basis points
above the previous month’s auction rate. Inflation has generally been
moving up, and most of these measures are at or above the Fed's
target.

__________________________________________OFF
BASE

Only
20 days until Christmas. Since Christmas this year falls on a Sunday, the next
day, the 26th will be a bank holiday.

That
means we are finally celebrating Boxing Day. Boxing Day is a holiday celebrated
throughout the United
Kingdom and Commonwealth nations on the day
following Christmas Day, when servants and tradesmen would traditionally receive
gifts known as a "Christmas box" from their masters, employers or customers.

It
began as a way of showing others less fortunate that we cared for them. Sounds
like something we should all be doing.

Monday, October 24, 2016

Of
uncertain origin, possibly from a dialect of Old Norse, bugge meaning big
man

_____________________________________________TIP OF THE WEEK

A bigly enervation
of the guidance on affiliation and franchises
should be in the new Standard Operating Procedures. The intractable
trichotillomania over eligibility should grow
quiescent.

SBA
expects that the SOP should be arrant and not
frustraneous.

In
other words, there is no reason to be pervicacious and oppugned to SBA
loans.

_____________________________________Indices:

PRIME
RATE= 3.50%

SBA
LIBOR Base Rate October 2016 =3.53%

SBA
Fixed Base Rate October 2016 = 4.86%

________________________________________

SBA
504 Loan Debenture Rate for October

The
debenture rate is only 2.21% but note rate is 2.249% and the effective yield is
4.261%.

________________________________________________AHEAD
OF THE YIELD CURVE

There does not
appear to be splentic presentiment over a bigly recrudescence of interest
rates.

There was strong
demand at the last auction of 30 year Treasury bonds. The 2.470 percent high
yield was just a half of a basis point below the yield awarded at the prior
auction and 29.8 basis points higher than the record low set in the July
auction. Long term bond yields continued to climb after comments by Federal
Reserve Chair Janet Yellen suggested there may be benefits in letting inflation
run higher than the current target of 2% in order to stimulate the
economy.

Inflation has for
years been dormant in the U.S., which is a key reason the Fed
has held off on raising interest rates in 2016. That’s led investors to seek
longer-dated debt, which offers higher yields but is more sensitive to inflation
expectations. In one sign of investor complacency, the real U.S. 30-year
yield -- which subtracts the level of inflation based on the core Consumer Price
Index -- is hovering near the lowest level since
1980.

One of the Fed’s leading
indicators on inflation is capacity utilization which measures the amount of a
plant that is in use at factories, mines and utilities . The Federal Reserve
recently reported that capacity utilization for September edged up 0.1 to 75.4
percent after having dropped in August.

Here is what capacity utilization
rates have done:

1997-
83.6

1998-
83.0

1999-
82.4

2000-
82.6

2001-
77.4

2002-
75.6

2003-
74.6

2004-
79.2

2005-
80.7

2006-
82.4

2007-
81.5

2008-
79.9

2009-
66.9

2010-
74.8

2011-
76.7

2012-
79.0

2013-
77.8

2014-
78.8

2015-
76.5

What does all this
mean?

I don’t
know.

Capacity utilization at 75.4% is
4.61% below the average from 1972 to 2015 and below the pre-recession level of
80.8% in December 2007. Several analysts have pointed to a rate between 81% and
82% as a tipping point over which inflation is spurred. The Federal Reserve
typically won’t initiate increases in interest rates until then.

The BLS reported that the
seasonally adjusted CPI for all urban consumers rose 0.3% (3.6% annualized rate)
in September. The CPI less food and energy rose 0.1% (1.4% annualized rate) on a
seasonally adjusted basis. According to the Federal Reserve Bank of Cleveland, the median
Consumer Price Index rose 0.2% (2.1% annualized rate) in September. The 16%
trimmed-mean Consumer Price Index also rose 0.2% (2.1% annualized rate) during
the month. The median CPI and 16% trimmed-mean CPI are measures of core
inflation calculated by the Federal Reserve Bank of Cleveland based on data
released in the Bureau of Labor Statistics' (BLS) monthly CPI
report.

Inflation has
generally been moving up, and most of these measures are at or above the Fed's
target

Keep your eyes and ears open for
Friday’s preliminary estimate of third quarter Gross Domestic
Product.

Impecunious
concerns will motivate the Federal Reserve but they might
festinate.

__________________________________________OFF
BASE

Is bigly really a
word?

During the
presidential debate, Donald Trump used the word “bigly” several times. It
seemed like he was trying to use it as an adverb of the word big to mean great
sized, not huge, but definitely large. Like his hands or so he
claims.

But that’s not the
correct usage of the word (unless the Donald meant violently and boastfully) if
you look at a brief history of bigly. This adverb came into use around 1400 and
stuck around for roughly 500 years. It has been used two different ways over the
centuries.

The first meaning
was to mean “with great force or violently or strongly.” It appeared in such
fashion in the classic King Arthur tale Le Morte d’Arthur, published way back in
1485: “So roughly and so bigly that none might withstand him,” wrote Sir Thomas
Malory.

The second
meaning, which has been more popular in recent centuries, means “boastfully,
haughtily or proudly.” Thomas Hardy put it to use in his 1874 novel Far From the
Madding Crowd: “I don’t see that I deserve to be put upon and stormed out for
nothing, concluded the small woman bigly.”

The SBA began its
new fiscal year October 1st with a $27 billion authorization for the SBA 7(a)
loan program. This comes after another record year for SBA 7(a) loans with SBA
7(a) loan approvals hitting just over $23 billion.

The 2017 Budget
continues upfront fee waivers on 7(a) loans up to $150 thousand and provides a
50 percent fee waiver on 7(a) loans up to $500 thousand to veteran-owned
businesses.

That means there
should be plenty of money for SBA borrowers to buy real estate, refinance real
estate, buy businesses, start businesses, refinance business debt and obtain
working capital.

Last week, the
House on Wednesday approved a bill to fund the federal government through
December 9, averting a costly shutdown two days ahead of the deadline. The
trichotillomania was enervated.

_____________________________________Indices:

PRIME
RATE= 3.50%

SBA
LIBOR Base Rate September 2016 =3.52%

SBA
Fixed Base Rate September 2016 = 4.85%

________________________________________

SBA
504 Loan Debenture Rate for September

The
debenture rate is only 2.03% but note rate is 2.066% and the effective yield is
4.082%.

________________________________________________AHEAD
OF THE YIELD CURVE

You should not
have any trichotillomania over interest rates.

At its last
meeting on interest rates, the Federal Reserve kept its benchmark rate at a
historically low 0.4%, where it has stood since officials raised it last
December for the first time in nearly a decade. In their statement, they said
“Near-term risks to the economic outlook appear roughly balanced,” its first
such positive assessment this year. A similar appraisal last year was followed
by a rate increase at the next meeting.

After the meeting,
short-term Treasury yields rose but long-term yields fell. A so-called
flattening yield curve—describing the shape of Treasury yields moving from
short-term to long-term notes—tends to occur when fixed-income investors are
betting that the Fed is about to hike rates, which can lead to selling of
short-term notes, the most influenced by changes in the federal-funds rate, and
purchasing of longer-dated Treasuries.

Longer term
Treasuries, such as the 30 year Treasury note, are the most sensitive to
long-term growth and inflation expectations.

Keep your eyes and
ears open for next week’s auction of 30 year Treasury
bonds.

Here is what the
30 year Treasury bond has been doing and this week’s interesting little
table:

2001-
5.49

2002-
5.43

2003-
ND

2004-
ND

2005-
ND

2006-
4.91

2007-
4.84

2008-
4.18

2009-
3.89

2010-
4.61

2011-
2.89

2012-
2.77

2013-
3.25

2014-
3.97

2015-
2.91

2016-
2.32

What does all this
mean?

I don’t
know.

Last
month’s auction of new 30-year Treasuries saw weak demand with the yield on the
30-year note advancing 7.3 basis points to 2.469%. Since then the long bond’s yield has dropped
to 2.32%

Impecunious
concerns will motivate the Federal Reserve but they might
festinate as they don’t want to be oppugned and enervate the economy. There
just might be a recrudescence hortatory with
splenetic presentiment amongst ultracrepidarians after Friday’s report on
jobs for the month of September.

__________________________________________OFF
BASE

Impecunious?
Festinate? Oppugn? Enervate? Recrudescence? Hortatory? Splenetic?
Presentiment? Ultracredpidarians? If you are now feeling trichotillomanical, a
three day weekend approaches!

Monday, September 19, 2016

After Dr.
Pangloss, a philosopher and tutor in Voltaire's 1759 satire Candide. Pangloss
believes that, in spite of what happens -- shipwreck, earthquake, hanging,
flogging, and more -- "All is for the best in the best of all possible worlds."
The name is coined from Greek panglossia (talkativeness).

The PRI is a
monthly composite index that tracks the health of and the outlook for the
U.S. restaurant industry. Launched in
2002, the RPI is released on the last business day of each month. The RPI
consists of two components – the Current Situation Index (measuring current
trends) and the Expectations Index (measuring restaurant operators' six-month
outlook) – and tracks the health of and outlook for the U.S. restaurant
industry. Although sales and traffic results softened in recent months,
restaurant operators continued to report positive capital spending
activity.

Restaurants are
the largest recipient of SBA financial assistance based upon SBA loan volume
data sorted by NAICS codes.

If you would like
a copy of the latest National Restaurant Association's Restaurant Performance
Index report, let me know.

_____________________________________Indices:

PRIME
RATE= 3.50%

SBA
LIBOR Base Rate September 2016 =3.52%

SBA
Fixed Base Rate September 2016 = 4.85%

________________________________________

SBA
504 Loan Debenture Rate for September

The
debenture rate is only 2.03% but note rate is 2.066% and the effective yield is
4.082%.

________________________________________________AHEAD
OF THE YIELD CURVE

Only a Pangloss
would want to raise interest rates right now.

The Federal
Reserve’s next meeting on interest rates will end on September 21st,
the last day of summer.

The $13.6 trillion
Treasuries market is sending a signal it hasn’t flashed in years. Last week’s
auction of $12 billion in new 30-year Treasuries saw weak demand. The yield on
the 30-year note advanced 7.3 basis points to 2.469%. Low end-investor interest
meant that dealers had to step in and take down a large 37.5 percent of the $12
billion offered, their biggest share since August last year. The high yield
awarded was 20 basis points higher than in the previous auction and matched the
highest rate since May. The extra yield that investors demand to own 30-year
rather than five-year obligations, a measure of the yield curve, rose for almost
two straight weeks. That’s the longest streak since 2012.

A Fed on hold is
seen as potentially stoking inflation, which erodes the value of long-term debt.
Futures signal barely a one-in-five chance that the Fed will tighten policy this
month amid tepid economic growth and restrained inflation.

Eurodollar futures
settle at a three- month lending rate that has averaged about 22 basis points
more than the Fed's target over the past 10
years.

Here is a summary
of what the market expects for Eurodollar futures based upon the pit-traded
prices at the Chicago Mercantile
Exchange:

DEC16-
0.93

DEC17-
1,09

DEC18-
1.23

DEC19-
1.39

DEC20-
1.57

DEC22-
1.931

What does all this
mean?

I don’t
know.

Eurodollar futures
currently imply a federal funds rate that really is not going to be moving up
all that much any time soon.

Impecunious
concerns will motivate the Federal Reserve. They don’t want
to enervate the economy.

__________________________________________OFF
BASE

Did you ever
wonder why Oktoberfest occurs in September and not October?

It goes back to
when the Pangloss prince of Bavaria, Ludwig married a princess back in
1810. The citizens of Munich were invited to attend the festivities
held on the fields in front of the city gates to celebrate the royal event.
Everyone had such a good time that the decision to repeat the celebrations in
1811 launched what is now the annual Oktoberfest
tradition.

Ludwig would go to
become king. Not understanding anything about his people, Ludwig decreed a tax
on beer. Splenetic presentiment erupted into the beer riots of Bavaria. Crowds of urban
workers beat up police while the Bavarian army showed reluctance to get
involved. Civil order was restored only after the King decreed a ten percent
reduction in the price of beer. Friedrich Engels was so appalled that he wrote
about it in the Northern Star newspaper and then co-authored the Communist
Manifesto with Karl Marx.

The first day of
fall is September 22, 2016. The September equinox marks the moment the Sun
crosses the celestial equator – the imaginary line in the sky above the Earth’s
equator – from north to south. The length of day and night is nearly equal but
then the days will continue to be shorter and shorter and night will be longer
and longer until we plunge into almost eternal darkness. Eventually the days
will then start to get longer again giving the Pangloss in all of us something
to look forward to.

There was a
substantial change to guidance on affiliation and franchises. Formerly SBA
required review of all franchise agreements of all franchises owned by the
franchisee, not just the applicant agreement. That is no longer the case.

SBA, along with
other federal agencies, is currently developing a comprehensive approach to
requests for consent to C-PACE financing on 504 and 7(a) project property. Keep
in mind that the $5,000,000 limitation for SBA financial assistance only applies
on a per project basis for clean energy projects. Borrowers can obtain additional
financing even if they have $5,000,000 in existing SBA
guarantees.

You also no doubt
heard that SBA 504 loans can now be used for debt
refinance.

SBA is also
putting the finishing touches on another revision to its Standard Operating
Procedures.

_____________________________________Indices:

PRIME
RATE= 3.50%

SBA
LIBOR Base Rate August 2016 =3.49%

SBA
Fixed Base Rate August 2016 = 4.75%

________________________________________

SBA
504 Loan Debenture Rate for August

The
debenture rate is only 2.04% but note rate is 2.077% and the effective yield is
4.093%.

________________________________________________AHEAD
OF THE YIELD CURVE

The Federal
Reserve has one more chance to estivate.

Its next meeting
on interest rates will end on September 21st, the last day of
summer.

At its last
meeting the Fed included this phrase in a statement released after the meeting:
"Near-term risks to the economic outlook have
diminished.”

Based on the FOMC
statement, the likelihood of a rate hike in September (or November or December)
has increased. The first paragraph was about as upbeat as back in April when
many analysts thought a rate hike in June was possible. So now the key is the
data. In July, U.S. payrolls leaped for a second
straight month as employers added 255,000 jobs. Keep your eyes and ears open
for the August report on jobs. It comes out on the Friday of Labor Day
weekend. If the data is solid, the FOMC might raise rates in
September.

Here is a summary
of net payroll employment and this week’s interesting little table of
data:

July 255,000

June 292,000

May
11,000

April
123,000

March
186,000

February
244,000

January
172,000

2015
2,740,000

2014
3,116,000

2013
2,074,000

2012
2,193,000

2011
2,103,000

2010
1,022,000

2009
-5,052,000

2008
-3,617,000

2007
1,115,000

2006
2,071,000

2005
2,484,000

2004
2,019,000

What does all this
mean?

I don’t
know.

There has been a
recrudescence in job growth, averaging 274,000 over the last two months and
186,000 per month this year.

Impecunious
concerns will motivate the Federal Reserve. They don’t want
to enervate the economy and create any splenetic
presentiment.